Friends of the ex-senator have found a legal loophole that could allow him to greatly exceed the city's campaign spending cap.

Don Perata and his political allies in Sacramento may have found a legal loophole that could let the former state senator spend as much money as he wants on the Oakland mayoral election. Normally, Oakland mayoral candidates are prohibited by law from violating the city's expenditure cap, which currently is about $379,000. However, actions taken by a shadowy political group in Sacramento with close ties to Perata could eventually allow him to spend far more than $379,000 without worry of breaking the law.

Last weekend, the Perata-linked group, Coalition for a Safer California sent a letter to the Oakland City Attorney's Office and the Oakland Public Ethics Commission stating that it had exceeded the city's cap on expenditures for so-called "independent expenditure committees." The letter also claimed that because the coalition had overspent, Perata and every other candidate were now free to overspend too without fear of penalty. Typically, mayoral candidates don't violate locally imposed campaign spending caps because doing so generates bad press and it's expensive. Under Oakland law, candidates can face fines triple the amount they overspend. So if Perata were to exceed the cap by $50,000, he could face a $150,000 fine.

In interviews, Dan Purnell, executive director of Oakland's Public Ethics Commission, and Mark Morodomi, a lead attorney for the Oakland City Attorney's Office, said that the Coalition for a Safer California was correct. If the group spent more than the city's cap for independent committees, about $90,000, then Oakland's campaign finance law allows all other committees, along with the individual campaigns themselves, to spend as much money as they want. Purnell called the loophole a "crude" measure that was meant to help candidates who have been unfairly attacked by soft-money groups. But the loophole also helps a candidate like Perata, who benefits when a committee that supports him also overspends on attack ads against his competitors.

Councilwomen Jean Quan and Rebecca Kaplan, who are Perata's main competitors, also received the letter. It was sent by Paul Kinney, who runs Coalition for a Safer California and is a longtime Sacramento political consultant with close ties to the ex-senator. The group strongly supports Perata and is funded by his primary employer over the past year, the state's prison guards' union.

However, after the Express posted a blog item about the letter on its web site on Monday, Kinney said in a phone interview that he had decided to rescind it. He said he mistakenly thought that the cap was $70,000 — not $90,000. Purnell said the cap was established as $70,000 in 1999, but adjusted for inflation, it's now about $90,000. Still, Kinney would not rule out the possibility of the group buying future ads in the campaign, which could then put it over the city's cap and lift the cap for Perata, too.

Such a move would allow the ex-senator to overspend by hundreds of thousands of dollars without fear of fines. The issue is key for him because, as Full Disclosure reported last month, Perata had already spent $322,000 on his mayoral campaign by June 30, leaving him with virtually no money for the final stages of the race (see "Perata Nears Expenditure Cap," 8/11/10). But if Kinney's group goes over the cap, Perata apparently will have no such concerns.

Indeed, his lavish early spending on expensive consultants indicates that Perata may have been counting on his friends and the legal loophole all along. The possibility of being able to spend whatever he wants on ads in the weeks ahead may also help explain why Perata has run such a low-key campaign so far. In the past few months, he has missed at least five mayoral debates. And he says he'll only attend forums in which all ten candidates are invited, thereby insuring that there won't be enough time during the events to ask him tough questions about his many legal problems over the years.

Lifting the city's spending caps, meanwhile, also could prove to be a serious blow to the campaigns of Quan and Kaplan. Neither had planned to spend more than the city's cap, and neither can match Perata's legendary fund-raising prowess. Quan called the move by Kinney's group a "blatant" attempt to circumvent campaign finance law. She also contends that it violates "the spirit" of the city's expenditure law.

For her part, Kaplan questioned whether the expenditures by Kinney's group were truly "independent" as required by law. She noted the many connections between the group and Perata and pointed out that it was primarily funded by Perata's employer — the prison guards' union. The prison guards' union hired Perata as a "political consultant" in early 2009 and has paid him more than $400,000 ever since. "I think it's incredibly disrespectful to the voters of Oakland," she said of Kinney's group's actions.

Kaplan also questioned whether the expenditures by Coalition for a Safer California qualified as true campaign expenses as required to lift the city's spending caps. In June, the group blanketed Oakland with two hit-piece mailers, sharply criticizing Quan and Kaplan for their stances on police pensions. Both women believe Oakland cops should be contributing to their retirement plans to help the city balance its budget.

But the June hit-pieces never mentioned the Oakland mayor's race, nor did they tell voters to vote against Quan and Kaplan. In fact, the mailers also criticized other councilmembers — Pat Kernighan, Nancy Nadel, and Desley Brooks — for their stances on police pensions, and none of them are running for mayor. Morodomi, a lead attorney for Oakland's City Attorney's Office, said that money spent by a group must be clearly for or against candidates in a particular race to qualify as true campaign expenses under the cap.

It should be noted that the June mailers also contained numerous factual errors, including the false claim that Kaplan voted to lay off police officers. Kaplan, in truth, voted against the layoffs.

Kinney said subsequently that he was not counting those mailers toward the cap. He said he realized that they didn't qualify as true campaign expenditures. He also said his group has not spent money on ads at all in the Oakland mayor's campaign. Instead, he said the $70,000 or so the group has spent went to fund-raising and his salary.

He denied coordinating with Perata in any way. Perata has also previously denied working with Kinney's group. Candidates are prohibited by law from coordinating with so-called independent committees. "He's doing our thing, and we're doing ours," Kinney said.

However, Kinney's group also has not been completely forthcoming about its activities. Under California law, statewide independent committees, such as Coalition for a Safer California, must file a report with the Secretary of State's Office when they make campaign expenses for or against a candidate or candidates — even if it's for fund-raising or a political consultant's salary. But Kinney's group has filed no such report for the Oakland mayor's race. As a result, it's not clear whether his group has made any qualifying expenditures under Oakland's cap. If it hasn't, then it will need to spend another $90,000 to lift all the caps in the race.

The controversy surrounding Kinney's group also further raises questions about Perata's close associates and their competence and may shed more light on what a Perata mayor's office might look like. Sending mailers full of errors, followed by an official letter declaring that it had exceeded the city's cap when it had not, and then claiming to have made expenses that it did not report to the state, is embarrassing at best. And this is from a campaign that claims Perata will restore competence to Oakland City Hall.

Ultimately, it may be up to the Public Ethics Commission or the City Attorney's Office to decide whether Kinney's group has actually exceeded the city's spending cap or not. Unfortunately, Oakland law is unclear as to who makes that determination. What is clear is that if Perata decides to overspend without an official ruling, he would run the risk of the Ethics Commission or the City Attorney's Office later deciding that the cap had not been lifted after all, and thus could face a large fine.

No wonder that Perata has called for the Ethics Commission to be disbanded.

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